Pension change Dozens of Honolulu police officers are considering retiring by the end of the year because of a change in the way the state public workers' pensions will be calculated starting January.
hits cops
Lower calculated payments
lead many police to consider
retiring this yearBy Nelson Daranciang
ndaranciang@starbulletin.comHowever, Honolulu Police Chief Lee Donohue said he does not believe there will be an exodus of retiring police officers.
The current formula for calculating an employee's pension uses the average of his or her highest three earnings years. A year can be any consecutive 12-month period.
In the last legislative session, state lawmakers approved a bill limiting the "high three" to calendar years, or the last 36 months of employment if an employee retires at the end of the year. Other changes restrict retirement dates to the first day of each month and last day of the year and reduce pension payments to once per month.
The bill passed with little comment from public employee unions and little discussion among lawmakers.
Les Ihara, Senate Labor Committee vice chairman, referred to the bill as a housekeeping measure.
"It was our understanding that it wasn't going to have an adverse effect on anybody," said Rep. Scott Saiki, House Labor Committee vice chairman.
The change will have no effect on most public employees whose incomes are consistent year to year, said David Shimabukuro, Employees' Retirement System administrator.
But the change can reduce the pensions of employees whose incomes vary greatly year to year because of overtime, like police officers.
Police officers did not realize the impact the bill could have on their pensions until after it became law.
"After reading it for the 11th or 12th time, I hit the roof and started telling everybody," said Detective Loren Andrade, State of Hawaii Organization of Police Officers board member.
SHOPO officials met with ERS officials to determine what effect the change will have on retiring police officers. They are awaiting an opinion from the state attorney general on whether the old method of calculation can be used for employees who retire after this year if his high three years occur before Jan. 1, 2003.
But some officers are not waiting and have already decided to retire this year.
Andrade said he is retiring in December, after 28 years and 10 months as a police officer, because of the change. By his own calculations, Andrade said his "high three" would be $20,000 lower if he retired next year.
"I wanted to stay for two more years," Andrade said.
Missing Persons Detail officer Joe Self is also retiring earlier than he originally planned. "I plan to go by the end of the year because of that," he said.
The average number of officers who retired from HPD over the past three years is 52. So far this year 26 officers have retired and the retirements of another 16 are pending, said Capt. Mark Nakagawa, Human Resources Division.
However, 200 officers have made retirement inquiries with the Employees Retirement System because of the change, Andrade said.
State public employees can retire with as little as 30 days notice. And more retirements occur in December than other months, Nakagawa said.
Donohue said he will have a better idea of exactly how many officers will be retiring this year by late November.
Shimabukuro said he asked for the changes "so that we can finalize the computations faster."
Pension checks for recent retirees are based on estimates because the ERS has a backlog of computations. The changes also simplify the computations, Shimabukuro said.
For public workers who became members of the ERS prior to 1971, their pensions can be based on their five highest earnings years, including their vacation pay or their highest three years excluding vacation pay, whichever is greater.
Honolulu Police Department